German regulator Bnetza's decision to allow the Eugal pipeline to be built without bidirectional capacity at the German-Czech border met the required conditions, European regulator Acer has said.
Eugal is the German onshore continuation of the planned 55bn m³/yr Nord Stream 2 pipeline, and is to largely deliver Russian gas to the Czech Republic and Poland.
EU rules require new pipelines connecting market areas to be built with bidirectional capacity unless it can be established that there is little need for such capacity.
German gas system operator Gascade applied for an exemption at the Deutschneudorf border point — where Eugal connects Germany's Gaspool market area and the Czech Republic — last year and subsequently consulted on the application. Only Polish system operator Gaz System responded to Gascade's consultation, Acer said. The Polish operator argued that an exemption would perpetuate liquidity differences between western and eastern wholesale markets, and jeopardise security of supply across the region in the event of an interruption to the flow of gas to Germany from Russia through the Yamal pipeline, resulting in a supply crisis in Poland and northern Germany.
But the costs of a reverse flow project would exceed the expected benefit for security of supply, Gascade had said. And market demand for additional transport capacity to Germany from the Czech Republic was weak at the time of the request and not expected to materialise in the foreseeable future, the German operator had argued.
There was "insufficient evidence" of the need for reverse flow at the point, Acer said. There has been no demand for yearly capacity to Germany from the Czech Republic, both at regular capacity booking auctions as well as at the most recent incremental capacity processes, covering 2015, 2017-19 and 2019-21, the regulator said. And there is already sufficient unused physical and commercial entry capacity to Germany from the Czech Republic, it said.
The Brandov-Gaspool virtual interconnection point (VIP) between the two countries already offers bundled capacity adjacent to Deutschneudorf, Acer said. And there is enough unused capacity to supply Poland from Germany on a firm basis at Mallnow, it said. Contrary to Gaz System's view, Poland's security of supply would not be jeopardised if the Yamal pipeline were to be interrupted, Acer said.
And it may be possible for Eugal to deliver gas to Germany even without the addition of a new compressor station, should a sufficient pressure differential between the Czech and German networks be reached, Acer said. Should the pipelines arriving at Deutschneudorf reach around 70 bar on the Czech side, it may be possible for flows to Germany to reach up to 50pc of its designed capacity towards the Czech Republic, while resulting in a "fairly small" pressure drop at the Radeland 2 compressor station, Acer said. As this station is already equipped with reverse flow capabilities, it could then be used to deliver gas into the Jagal-Yamal system or FGL306 — which feeds into the Netra pipeline further west.
But these possibilities were not studied in Gascade's request, Acer said. The operator's exemption request also did not include a required feasibility study, a cost-benefit analysis in line with the relevant methodology, or a "meaningful consultation", Acer said.
But despite these shortcomings, Bnetza's decision "generally follows the requirements", the regulator said.
Bnetza's exception runs for four years, from 5 February 2020 to 4 February 2024. Given the duration of the exemption and the lengthy lead time for implementing physical capacity projects involving major infrastructure additions, bidirectional capacity could only materialise by 2025 at the earliest, Acer said. While the duration of the exemption "appears to be justified", demand and risk patterns could change much earlier and should be closely monitored from February 2022 until the end of the exemption, the regulator said.
Acer has submitted its view to the European Commission for possible further action, and to all relevant authorities and national regulators concerned, it said.
